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The Value of a Statistical Life Under Changes in Ambiguity

Han Bleichrodt (), Christophe Courbage and Béatrice Rey-Fournier
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Han Bleichrodt: Erasmus School of Economics - Erasmus University Rotterdam, ANU - Australian National University
Christophe Courbage: HES-SO - University of Applied Sciences and Arts Northwestern Switzerland
Béatrice Rey-Fournier: GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique

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Abstract: The value of a statistical life (VSL) is a key parameter in the analysis of government policy. Most policy decisions are made under ambiguity. This paper studies the effect of changes in ambiguity perception on the value of a statistical life (VSL). We propose a definition of increases in ambiguity perception based on Ekern's (1980) definition of increases in risk. Ambiguity aversion alone is not sufficient to lead to an increase in the VSL when the decision maker perceives more ambiguity. Our results highlight the importance of higher order ambiguity attitudes, particularly ambiguity prudence.

Keywords: neoadditive preferences; Value of a statistical life; ambiguity; prudence; smooth ambiguity model (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-rmg
Date: 2018
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-01943887
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